Red Hat quarterly profit doubles

SAN FRANCISCO (MarketWatch) - Red Hat Inc. shares climbed as much as 4% Thursday after the open-source software company reported a third-quarter profit that more than doubled from a year ago due to a steep rise in its key software-subscription sales.

Red Hat
RHAT
shares rose $1.06, to $27.61 after it said it earned $24.6 million, or 12 cents a share, compared to $12.4 million, or 6 cents, a year ago.

Revenue climbed to $73.1 million, from $50.9 million, topping the estimates of analysts surveyed by Thomson First Call, who forecast a profit of 9 cents a share on revenue of $71 million.

Red Hat sells the Linux software used to run corporate servers, a market where it's gained ground in recent years against rivals like Sun Microsystems Inc.
SUNW, -0.87%

Subscription revenue, which makes up the biggest piece of Red Hat's sales, rose to $60.2 million from $39.2 million in the year-ago period. Operating income climbed 147% to $18.7 million, while gross margin expanded to 84% of revenue.

Going forward, Red Hat estimates that it report a fourth-quarter profit between 11 cents and 12 cents a share, on revenue in a range of $77.5 million to $78.5 million. Analysts had forecast Red Hat to earn 10 cents a share, on $76.7 million in revenue.

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